State Tax Treatment of Health Savings Accounts

Federal HSA Tax Treatment

States Following Federal HSA Tax Treatment

These states offer deductions on state income taxes for contributions to Health Savings Accounts.

States That Fully Tax HSAs

States That Tax Contributions, Interest, and Capital Gains

States that have indicated that they must pass state legislation before Health Savings Accounts will receive a tax benefit at the state level.

These two states consider any interest or capital gains you earn in your HSA as taxable income, and do not allow you to deduct contributions on your state tax return.

No State Taxes on HSAs

No State Taxes on Health Savings Accounts

States not affected by federal income tax guidance

These states do not tax individuals on income, thus there is no income tax deduction when contributing to your HSA. 

Dividends & Interest Tax on HSAs

Dividends and Interest Tax on HSA Accounts

These states do not tax income, and thus there is no state income tax deduction when contributing to an HSA. They do tax dividends and interest on HSA accounts if you make a taxable withdrawal from your account.

*In New Hampshire you must report these earnings if they amount to over $2400 filing individually, or $4800 if married filing jointly.

**In Tennessee you must report your dividend and interest earnings if they total over $1250 for the year, or $2500 if you are married filing jointly.